Public Bill Committee

[Mr Edward Leigh in the Chair]

Sitting suspended for Divisions in the House.

On resuming—

Clause 38  - Duty not to exceed annual carbon dioxide emissions limit

Amendment proposed (this day): 122, in clause38,page39, line36,leave out subsection (2) and insert—
‘(2) For generating stations constructed pursuant to a relevant consent given or made on or after the date on which subsection (1) comes into force and prior to 1 January 2020, until (and including) 2029 the statutory rate of emissions is 450g/kWh.
(2A) For generating stations constructed pursuant to a relevant consent given or made on or after 1 January 2020, until (and including) 2034 the statutory rate of emissions is 200g/kWh.’.—(Barry Gardiner.)

Question again proposed, That the amendment be made.

Edward Leigh: With this it will be convenient to discuss the following:
Amendment 115,in schedule 4, page109,line37, leave out ‘may’ and insert ‘will’.
Amendment 121, in schedule 4,page110,line4, at end insert—
(iii) substantial pollution abatement equipment dealing with oxides of sulphur, oxides of nitrogen, heavy metal emissions or particles is fitted to the generating station.’.
Amendment 123, in clause46,page47,line20,at end insert—
‘(f) Chapter 8 (Emissions Performance Standard).’.

Tom Greatrex: I will not detain the Committee very long; my hon. Friend the Member for Brent North went through a lot of the issues in detail in his usual comprehensive manner before the series of Divisions in the House, and there is no need to repeat those points. I want to put a couple of other points on the record before the Minister responds.
I will say at the outset that I am sure that the Minister would not be under any misapprehension that Opposition Members do not accept and understand the need for new gas plant for our generation mix. However, in our oral evidence sessions, the representative of E.ON summed the situation up perfectly when she talked about a generation mix backed up by gas, not based on gas. That is where our primary concern around the operation of the emissions performance standard and its level is focused. We need gas, will continue to need gas and indeed need new gas; but we do not want to end up in a situation, whether intentionally or otherwise, where the balance is not right and we have too much gas. The debate around what might happen with gas prices is ongoing. None of us in this room can be sure about where gas prices will be in five, 10 or 15 years. We should therefore be very conscious of the need to ensure that we do not compromise our security of supply or cause an impact on consumers by having too much gas and not enough of other energy sources.
In his contribution before lunch, my hon. Friend was right to make points around carbon capture and storage. The Minister and I have discussed CCS a number of times. The EPS is crucial to CCS. I heard some sedentary comments and interventions about there being other mechanisms to ensure the promotion of CCS; my concern is that the EPS at this level, without the digression, could inhibit CCS, and could have unintended consequences, as the Government are currently expecting other signals to help ensure that CCS comes to market.
We do not need to rehearse the issues around the amount of money involved. I know the Minister will refer to the £1 billion competition. I have questioned him on this issue before, and I have in front of me the Cabinet Office document that is explicit about the £200 million available in the current spending review period. I know we have discussed that before; if the Minister does not have that document with him, I am happy to pass it over to him to look at. But there is a concern here: we can talk about £1 billion being available into the future, but none of us can say what is accounted for in the next comprehensive spending review period, because that comprehensive spending review has not yet happened. There is a very real concern around that, as the Minister will know, in terms of the CCS industry.
CCS is vital in helping us decarbonise and ensuring that we have a balanced generation mix. I find it very hard to see how we can manage without CCS in the future. That is why it is vital that the signals are right, that other policy instruments do not undermine CCS and that people who have concerns about this issue are properly reassured and are given proper clarity. Without some of the detail on how the contracts for difference will apply to CCS, which my hon. Friend touched on this morning, it will be difficult for us to be sure on this issue. A combination of all those factors could lead to the EPS causing a real problem.
I therefore ask the Minister to take these issues seriously, as CCS is vital. The Opposition have not been shy about promoting CCS as a significant part of our mix. Although renewables, nuclear and CCS are among the Government and the Department’s energy priorities, CCS sometimes appears to be simultaneously the holy grail and the forgotten relative. We are concerned about that, and we ask the Minister to clarify that. If we are to decarbonise, keep the right balance and ensure that the system is properly and flexibly backed up we need CCS. We need gas as well, but not at any cost, and we must not have an overshoot of gas because of the impact that that might have on our emissions and our ability to achieve decarbonisation targets.

Michael Weir: It is a pleasure to serve under your chairmanship, Mr Leigh. I would like to make a short contribution to this important debate. I have always been supportive of CCS and I would love to see it widely deployed. It is somewhat ironic that we are discussing gas CCS, because two Energy Bills ago I introduced a proposal—strongly supported by the hon. Member for Wealden (Charles Hendry), who was then the shadow Energy Minister, and by colleagues who are now in Government—to include gas as one of the four planned CCS projects. The then Labour Government strongly opposed the measure, and they only caved in and brought forward their own amendment on Report.
I have followed with interest the seemingly endless CCS competitions, which have yet to produce any winners, and I fully support the desire of the hon. Member for Brent North for a lower EPS limit. Normally, I would line up enthusiastically behind his amendment, but there is a danger that the effect of the amendment will be the opposite of the hon. Gentleman’s intention, and that it might stop the effective development and deployment of CCS. I remind hon. Members of the discussions we had with Dr Luke Warren from the Carbon Capture and Storage Association in our evidence sessions. He told us:
“The work undertaken by the cost reduction task force showed, with a high degree of confidence, that CCS can be delivered in the early 2020s at a cost equivalent to other low-carbon technologies. The first projects are likely to be more expensive. They will be smaller and more expensive in terms of cost-per-unit performance.”
When I pressed him later on the matter, he said:
“Just to be clear, our expectation is that we can have the first projects operating before the 2020s. The point about the 2020s is that that is when the first commercial-scale projects could be operating.”––[Official Report, Energy Public Bill Committee, 17 January 2013; c. 116-21, Q334 and Q348.]
To be scrupulously fair to him, he went on to make the point that the hon. Member for West Aberdeenshire and Kincardine made this morning, namely that the carbon floor price would drive CCS more than the EPS.
My concern is about the 2020s. Luke Warren is not expecting to be able to deploy the technology commercially until the 2020s, but the amendment would force any plant given a construction consent on or after 2020 to comply with the lower limit. It can take several years from a construction consent for a plan to be constructed and operated. With the best will in the world, it is clearly a possibility that time scales will shift and that delays will occur. We may end up preventing development of CCS because by that date it has not been possible adequately to demonstrate that a commercial plant can operate at that level, although clearly the intention is that it will operate well below that level, and we all hope that that will happen.
That concern is exacerbated by the submission we received the other day from the Carbon Capture and Storage Association about the clause as it stands, let alone how it would read after the amendment. [Interruption.]

Edward Leigh: Order. Will Members please put their phones on silent, because there are a few tings going off?

Michael Weir: The association made the point that although the draft Energy Bill allowed a period for CCS to develop, the current Bill
“requires CCS projects to operate under the EPS regime from day one. The CCSA believes that the application of an EPS to a CCS plant from day one is problematic as a CCS project needs to be commissioned before it is able to operate to its designed limits. The commissioning and proving of a new, full-scale, end-to-end CCS project is a lengthy and complex process and it may take a significant period of time, potentially several years, before the capture, transport and storage components are fully integrated. The structure of the EPS significantly curtails the number of hours that CCS project developers have in a year to undertake the commissioning and integrating of the chain. The EPS therefore creates a significant regulatory risk for CCS developers as they could ‘run-out-of-hours’ under the EPS before commissioning has been completed.”
That is under the current EPS limit, which as we all know is set because effectively it would allow new unabated gas plants. However, there is a specific difficulty. While I am fully supportive of what is being sought—we all want the lowest possible EPS limit—there is a real danger that by setting this in the Bill at the moment, instead of hurrying up CCS and bringing it to market more quickly, it could have the opposite effect. I think that this is where the desire for EPS limits crashes up against the commercial realities of getting CCS up and running. I ask the hon. Member for Brent North to reflect on that before pressing his amendment to a vote.

Barry Gardiner: I am happy to respond to the hon. Member for Angus, because he has made a considered contribution in challenging the basis here. I understand the points he makes, and I say to him that of course it may be that a plant is not actually up and running until 2020. However, we are talking about a seven-year period from now, whereby developers will be incentivised to put forward stations for consent. I think he would accept that seven years is a reasonable period of time, for a gas station in particular. If that is taken into account, it is then again a reasonable period to recoup the investment made in that through to 2029. If one goes beyond that, or if one does not accept this amendment, one is committed to grandfathering all the way through to 2045, as the Government have it. He knows that is not a feasible way to meet the objectives which he and I share, both in 2050 and also in 2030.
I accept that there may be some would-be generators who will find it difficult to meet that 2020 target. In deciding which way to vote on this amendment the hon. Gentleman must consider whether it is best to put in an amendment that would encourage potential gas suppliers to get on with it and put in their bids for plant, and speed up the process of them applying before 2020. Or would it be better for them to be given a free rein not to develop CCS, because they are confident of the 450 grams per kWh threshold that would then last right through to 2045?

Michael Weir: I understand the hon. Gentleman’s point, but given the history of CCS the seven-year period he talked about is still relatively short. For how long have we been talking about the development of CCS? How many projects have come and gone within that period? It seems to me that it would be better for him to withdraw his amendment, and at least consider—clearly with the association—the best way to push this forward, to make sure that the Bill contains procedures to reduce the EPS, but ensure we still get CCS. The hon. Member for Rutherglen and Hamilton West has said that this is vital for the decarbonisation of the economy in due course.

Barry Gardiner: I am happy to have taken that intervention. Let me clarify that we propose that they do not necessarily have to come forward with a CCS proposal; they have to come forward with a gas proposal. If they come forward with a gas proposal, which is a much easier prospect for them, they then have to be able to fit CCS to that by 2030 in order to then go on emitting at the revised 200 level thereafter. So it is not that they must have all their ducks in a row for CCS before 2020; they do not. What they must do is put in place their proposal for a gas plant by 2020. That is the deadline, and subsequently they have a 10-year period, once the CCS technology has come through, in which to then fit that technology and make sure that they are operating at the revised emissions level of 200.

John Hayes: It is good to have you back in the Chair, Mr Leigh. I am anxious that we should make progress this afternoon. None the less, we have had a fairly long and detailed debate on important matters that require some consideration.
Let me first say that I have often wondered whether fact or fiction matters more. Generally speaking, I think that fiction matters more, because fiction provides the opportunity not just to dream but to imagine and to invent. For the purposes of our consideration this afternoon, however, it is fact that I want to deal with. In dealing with fact, let us dispel some of the fiction that we have heard.
Our commitment to CCS is profound and determined. In respect of the connection with gas and coal, which was mentioned at an early stage in the discussion by the hon. Member for Brent North, it should be remembered that only one of the four shortlisted projects is a gas project; the other three are for coal. If we were preoccupied to the point of obsession with gas, we would hardly be encouraging the continuing investment in technology that would allow the abatement of coal. I am on the record as saying that I want to bring coal to the coalition. I think that clean coal has a future—it is a great pity that the hon. Member for Wansbeck is not here because he would be salivating at this part of my speech.

Graham Jones: Coalicious.

John Hayes: Indeed, and I am sure that he will when he reads it in Hansard.
Having said all of that, as the shadow Minister said, gas is important, as long as it does not become predominant in the mix. I entirely acknowledge that point. Gas is important not only because it allows us to fill the projected gap between supply and demand—as he will know—because of the state of the existing infrastructure, which will age more rapidly than we can bring a number of other technologies on stream, but also as a back up for more intermittent technologies and as a means of providing the flexibility in the mix that we believe is essential to provide resilience and, therefore, sustainability.
The hon. Gentleman is right to point out, however, that if we are to make an argument for a mix, it has to be a mix and not essentially gas with a few other bits on the margin. Thus my support for coal, thus my—I choose this word carefully—unabated support for nuclear, which is a zero-carbon technology and thus my belief that renewables have their part to play in the mix, too. That brings me to the essence of the amendments.
Amendment 115 seeks to remove the Secretary of State’s discretion with respect to applying the EPS to existing coal plants that undergo upgrades to extend their technical lifetime to that of a new plant. I know that Opposition Members, like Government Members, are enthusiastic advocates of carbon capture and storage, so let me make a further point about our £1 billion competition in response to what has been said so far. Before I do so, however, I want to acknowledge the shadow Minister’s knowledge of, enthusiasm for and commitment to, CCS, and I welcome the fact that he challenged me on the funds available to support it.
In any future spending review, it is certain that I, and my Department, will make a powerful case for carbon capture and storage. Indeed, that is an understatement, given that we launched a £1 billion competition; given that so often, as a matter of record, we have advertised that fact; given that we are working with those four shortlisted projects; and given that, as the hon. Gentleman knows, I am in discussion with the European Union—I always slightly spit those words out—in respect of carbon capture and storage. Of course, I cannot anticipate that review, but I can say that this is absolutely critical to our considerations—as the hon. Gentleman recommends—about the abatement of carbon in gas and coal generation in order to meet our 2050 target and to provide the energy security from the mix that I described.
The other point that was made about the competition was a reprise. I do not mind reprising arguments: I like the past and I like to return to things we have visited before—literally and less literally.

Edward Leigh: Tedious repetition, however, is out of order, Minister.

John Hayes: I am trying to think whether “tedious repetition” is tautological, Mr Leigh, but it would be impolite for me to claim so, so I will not repeat a word.
The hon. Member for Brent North made the case that the Don Valley scheme, which was originally part of the competition, had been dropped for—I do not wish to put words in his mouth—less than defensible reasons. He said it was the top-performing scheme according to Europe, and questioned whether we were therefore right to end up where we have. I do not think I am overstating his case. I looked at the issue very closely because, like him, I wanted to be sure that the process we enjoyed was rigorous, fair and led to the best possible outcome. I went through this with my officials in some detail. I know that the criteria on which the competition was based were well-established, well understood by those involved and applied with rigour and precision, and that the bids were ranked entirely properly on that basis. I know that the local Member of Parliament—the right hon. Member for Doncaster North (Edward Miliband), who happens to be Leader of the Opposition and has some knowledge of these matters—met the Secretary of State on this matter, as any local Member of Parliament would, and has looked at the issue in some detail. So, I can assure this Committee and the hon. Gentleman that these things have been done properly.
On the essence of the argument about the relationship between the EPS, CCS and gas, I understand the hon. Member’s position. The virtue of this amendment would be to accelerate investment in CCS, but I will simply make three points to him, and then we should move on. First, to support the commitment to CCS that I have described, we will have CFDs in place specifically to give the funding, provoke the investment and build confidence in that technology, which I believe, as he does, beyond the abatement of gas and coal in this country, can be an opportunity for us to export British excellence. This could be an industry of value of itself in terms of jobs, skills and revenue.
Secondly, our carbon floor is an important further catalyst to that abatement. If the only means by which we were to encourage the abatement of carbon was as the hon. Gentleman describes, then the point he makes would have weight and be persuasive. But we have a number of mechanisms by which we would encourage CCS and discourage carbon. The Government are committed to this by agreement: there is no equivocation about our belief that a low-carbon generating mix is an essential part of what we wish to achieve. So the mechanisms we have in place include what I have described, but by their very nature, through the EMR, they will fill the gap in generating need in a way that reduces the space for carbon-based forms of generation. There will thus be some virtuous displacement, if I can coin a phrase, of the kind the hon. Gentleman would doubtless welcome.
My third and final point is that there could be a perverse, unintended consequence of these proposed changes. The measures already taken by coal plants in reducing emissions could be disincentivised by amendment 115. No one would want, as a result of the industry’s desire to meet the requirements of the EU industrial emissions directive, emissions abatement equipment to be a less attractive option for generators, and I know that that is not the intention behind the amendment.
The grandfathering process, which the hon. Gentleman described, is a means by which we hope to encourage new investment. We need to send a powerful signal that if we are to get investment at the scale required for demand to be met by supply, we must change the paradigm in terms of the Government’s ambitions. The proposed amendment, by significantly shortening that period—for a plant consented before 2020, it would be 2029, and for a plant consented from 2020, it would be 2034—would send the opposite signal to potential investors, which is not what the Government want and, much more importantly, not what the nation needs to guarantee energy security. We are giving a signal that vital new gas plant has regulatory certainty. In the circumstances we face, that seems to me to be essential.
The reason why I describe the hon. Gentleman’s position as contradictory is not that I do not regard him highly or do not respect his understanding of these matters, and nor do I believe his intent to be in any way malign; it is clear that he seeks to improve the Bill. But if he believes in CCS, to assume that it will not come on stream in line with the cost reduction taskforce report, with which he will be familiar, long before the period in question, is in itself to send a contradictory signal about how much faith we have in that technology and the people who are as determined as we are to make it work and make it happen, with all the virtuous effects that that would bring.
In that spirit, and casting aside the longer version of my speech so that we can make progress, I hope that hon. Members are reassured and will agree to withdraw their amendments.

Barry Gardiner: I do not want to detain the Committee for long—I recognise that the Government have the firepower and we do not—but I would like to respond to the challenges that the Minister laid down. He said that this is a matter of incentivising industry. I agree with him about that, but he has chosen to do it for a 30-year period when the regulator has said that 15 years would be sufficient, and 10 years already has been achieved by gas-fired plant. Therefore, the incentive that he gives—not one given by the Government, but one that forces households to pay out of their own pockets—provides double the incentive that the regulator says is required. In that sense, I disagree with him; I think that he is wrong and the British public will end up paying the price.
Secondly, it is important to consider just what it is that one incentivises. The Minister incentivises, in the Bill as it stands, not CCS but unabated gas to come on to the system. Once that gas is on the system, it is there right the way through to 2045, emitting at 450 grams per kWh. Let us be clear that this provides too much of an incentive for the wrong thing, which is unabated gas, and for a period of 30 years.
Out of 19 of the different electricity capacity modelling exercises, seven of which were commissioned by the Department of Energy and Climate Change, only two concluded that it is possible to meet the 50 grams per kWh target in 2030 without a significant deployment of CCS. The two models that achieve the 50 gram target without significant CCS deployment require 83 GW and 105 GW of renewable capacity, which is far beyond the estimates of what the CFD with the levy cap is capable of delivering. I understand the Minister’s remarks about the CFD and the different incentives in the system, but he must acknowledge that even his own model shows that CCS will not be achieved at the levels he has predicated.
The Minister has talked about certainty. The only certainty that his Bill as it stands will provide is the certainty that we will not meet our carbon targets. With that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Edward Leigh: I was rather hoping that someone might explain to me EL= RxCx7.446.

Barry Gardiner: I did this morning, Mr Leigh.

Edward Leigh: Oh, this morning. We are not very good at maths. I apologise.

Barry Gardiner: With your leave, Mr Leigh, I would be happy to explain it again.

Hon. Members: No.

Edward Leigh: Thank you, Mr Gardiner. I am so grateful to you. Another time.

Clause 38 ordered to stand part of the Bill

Schedule 4 agreed to.

Clauses 39 and 40 ordered to stand part of the Bill.

Schedule 5 agreed to.

Clauses 41 to 42 ordered to stand part of the Bill.

Clause 43  - Exemption from liability in damages

Amendments made: 4, in clause43,page45,line6,at end insert ‘, or under paragraph 6 of Schedule3,’.
Amendment 5, in clause43,page45,line13,leave out ‘or 3’ and insert ‘, 3 or 5’.
Amendment 6, in clause43,page45,line22,leave out ‘under section 2 or 17’ and insert ‘of a kind mentioned in subsection (1)’.
Amendment 7, in clause43,page45,line23,after ‘25’, insert ‘or paragraph 19 of Schedule3’.—(Mr Hayes.)

Question proposed, That the clause, as amended, stand part of the Bill.

Tom Greatrex: I do not wish to detain the Committee for long. Let me put a question to the Minister in relation to a specific point in the clause. Subsection (1) states that National Grid as system operator will not be
“liable in damages for anything done or omitted in the exercise or purported exercise of a relevant function specified in the regulations.”
With the exception of where National Grid has acted in bad faith or unlawfully, the organisation will be exempt from the payment of damages for its actions. As far as I am aware, the clause was not in the draft version of the Bill, so will the Minister explain why that was the case and why it has since been added in to the Bill, because, obviously, it was not available for pre-legislative scrutiny.
National Grid, as we have discussed, is a highly reputable commercial organisation that will carry out an important role in the delivery of EMR, but as a private company the purpose of at least some of its activity is to make a profit for its shareholders. It does not appear to be fair or sensible to protect a private company from being held responsible in court for its actions. Will the Minister outline the route open to a party that believes that it has been wronged or that it has suffered financially because of National Grid’s actions in relation to this clause? If that party cannot sue National Grid, should it sue the Government? Is the real impact of the clause to shift liability from a private company to the taxpayer?

John Hayes: Those are perfectly fair questions, and it is important that we put these matters on the record. The shadow Minister is correct to say that the measure was not in the draft Bill and was added later. As a result partly of representations that we received from a number of parties—the hon. Gentleman knows that the metamorphosis and evolution of the Bill was the product of many representations during pre-legislative scrutiny, as it should have been—we chose a system operator with care. It is an organisation with the skills and expertise necessary to do the job, because it already lies at the heart of the energy system. It is critical for those skills to be available so that we can deliver EMR. The solution is an innovative one, which will utilise private sector know-how to deliver low costs for taxpayers, consumers and industry. Had we gone down a different road, we would have been obliged to encourage or invent an organisation that would have ended up with a profile and skills very similar to those of National Grid.
As with any innovation, we cannot foresee every issue that might arise. Indeed, we have debated such issues over the past few days—it seems like weeks. It is important, therefore, that we limit National Grid’s liability for damages on the specific EMR functions it carries out. In answer to the hon. Gentleman, such protection is not unlimited. The measure certainly does not protect the system operator from complaint or deny people redress against its decisions—we will build such routes of redress into the design of EMR—but it does afford the system operator appropriate protection from litigation similar to some public sector bodies.
Let us be clear that the clause does not grant or promise any limitation on liability at this stage for National Grid. It merely provides us with the option, as we examine the progress of the change, to limit the liability on specific functions when, after due consideration, we deem it appropriate. We do that because the innovation is an important one, and we want sufficient flexibility to gauge the character of the liability. We are certainly neither confirming that we will limit liability at this juncture nor specifying the limits on that liability. We will not, and with this power we cannot, shield National Grid from liability derived from acts done in bad faith that breach the Human Rights Act 1998 or for which it is liable under the Electricity Act 1989. Even the powers we seek are limited powers.

Alan Whitehead: The Minister mentioned that the change will be made at no cost to the consumer, and one of the consequences will be the limitation of liability in a procedure that is a fairly new departure. Will he set out how National Grid will be rewarded for its work as system operator? Will it be rewarded directly, or will it be rewarded indirectly by being provided additional income in a block sum, out of which it might take some profit? If that is the case, might he propose any limitations on what National Grid might do as the result of its activities as a system operator?

John Hayes: That is a slightly broader matter that is beyond the specific scope of the amendment, as I am sure the hon. Gentleman knows, but it is a fair question. We would expect National Grid costs to be recovered through an extension of the existing system operators’ incentive regime, which he will know is administered by Ofgem. We do not see a significant change in those terms. Obviously, it will work within particular guidelines for the EMR. That is why he should not be excessively concerned about the powers over liability: liability will simultaneously be equally limited, of course, to the same territory.
We are not saying at this juncture that that liability would pass to the Government, but I take the point made by the hon. Member for Rutherglen and Hamilton West. If we were to exercise those powers, it is important that we should consider that carefully. I do not want to do the Opposition’s job for them, but it would not be unreasonable for him to ask us to consider both the impact and the value for money. If we were to exercise the powers and liability were to pass to the Government, further work by Government would be needed to test the scale, extent and consequence of that liability.
On the basis of his remarks, I will certainly go back and consider all those things closely. However, in essence, the measures are born of our determination to ensure that National Grid does as good a job as possible, and we will decide on a case-by-case basis where the exemption will apply as we confirm the functions through secondary legislation, which Parliament will of course have a chance to scrutinise. On that basis, I commend the clause to the Committee.

Question put and agreed to.

Clause 43, as amended, accordingly ordered to stand part of the Bill.

Clauses 44 to 46 ordered to stand part of the Bill.

Clause 47  - The ONR’s purposes

Question proposed, That the clause stand part of the Bill.

Tom Greatrex: I am conscious that we may have provided some of the Minister’s officials with a day out and not very much to do. I did not want to go through all the clauses on nuclear regulation without making a couple of points so that they feel that their time has been at least partly well used, although I do not wish to detain the Committee for long on this set of clauses. Clauses 47 onwards deal with the Office for Nuclear Regulation, and as we mentioned briefly on Second Reading, they broadly put on a statutory footing the arrangements currently in place. I do not believe that these issues are particularly contentious, although, as we heard this morning during oral questions, many other aspects of nuclear power are slightly more so.
We are aware that the Office for Nuclear Regulation works on 34 sites across the UK, from Dounreay to Dungeness; I do not think that there are two points further apart on the mainland of Britain. It is an operation that works diligently across the whole UK. The only issue I wanted to touch on in clause 47 is that of parliamentary accountability and ministerial responsibility in relation to the interaction with Health and Safety Executive, which is of course the responsibility of the Department for Work and Pensions. However, given that this body is being placed on a statutory footing through a piece of legislation from the Department of Energy and Climate Change, I ask the Minister to clarify whether the intention is that parliamentary accountability for the Office for Nuclear Regulation will continue to be through the Department for Work and Pensions, because of its responsibility for the Health and Safety Executive. Or, because it is now going to be on a statutory footing, will that responsibility lie with the Minister’s Department, as distinct from the Health and Safety Executive? I think it would be useful for Committee members to have clarity on this, if the Minister is able to provide that now.

John Hayes: I am grateful for the shadow Minister’s comments on these clauses. They represent a very substantial part of the Bill, as members of the Committee will have observed. I say with confidence that they are not by any means the most contentious part of the Bill. The changes we envisage are both about the process by which we establish the new Office for Nuclear Regulation, and its terms of reference.
The clause sets out the five sets of purposes, and the detail of what these purposes lead to in terms of how the new office will operate are addressed later in this Bill. None the less, this part of the Bill marks an important step forward. It represents one of the main reasons for creating the ONR as an independent statutory body. It will consolidate civil, nuclear, radioactive and transport safety and security regulation in one place, and hon. Members will see the sense of that.
The hon. Member for Rutherglen and Hamilton West asked about responsibility and accountability to Parliament. The Department for Work and Pensions will have overall sponsorship responsibility for the ONR, and will be accountable to Parliament for the overall governance of the ONR, the effective use of its resources and conventional health and safety at nuclear sites. This complements DWP’s responsibility as a sponsor Department of the Health and Safety Executive, exactly as the hon. Gentleman described. But my Department will have some responsibility for the ONR’s function in areas where it has ministerial accountability to Parliament. So in relation, for example, to the UK’s civil nuclear industry, Ministers in my Department are accountable to Parliament for nuclear safety, nuclear security, nuclear safeguards, and the transport of radioactive material in some circumstances.
It is therefore appropriate that the DWP should be the sponsor Department for the statutory ONR with an independent regulator, recognising the need for the regulator to be—and to be seen to be—independent of the policy responsibility for nuclear power, which is exercised by DECC. This is an important area. Although these are unpretentious clauses which certainly are not partisan in any way, I think a note to the Committee about those lines of accountability would be helpful. I have set them out, I hope, reasonably clearly, but it is very important that we understand how this new structure will relate to parliamentary scrutiny and to ministerial responsibilities. So with your permission, Mr Leigh, for absolute clarity I will support what I have said today in response to the hon. Gentleman with a letter to all Committee members. With that I hope we can make progress.

Question put and agreed to.

Clause 47 accordingly ordered to stand part of the Bill.

Clause 48 ordered to stand part of the Bill.

Clause 49  - Nuclear site health and safety purposes

Question proposed, That the clause stand part of the Bill.

Tom Greatrex: Again, I wish simply to raise one specific point with the Minister. Clause 49 defines the ONR’s non-nuclear health and safety purposes, which include, as the explanatory notes set out,
“securing the protection of persons at work on licensed nuclear sites in Great Britain, as well as the prevention of risks to the health and safety of other persons which arise from the activities carried out on these.”
The explanatory notes go on to say:
“Although this is one of the ONR’s purposes, the predominant regulator of conventional health and safety in Great Britain will continue to be the Health and Safety Executive. This is reflected in the relationship between the ONR and the HSE”.
Will the Minister clarify whether the measures will therefore result in any changes in the day-to-day responsibilities of the ONR? I understand that there will be a board member of the Health and Safety Executive on the ONR board, and that the Bill allows for an ONR member to be on the HSE board, but it is unclear what will happen on a more practical level. It would be useful to the Committee if the Minister could provide any further detail—if not today, perhaps subsequently, in writing.

John Hayes: The clause sets out the ONR’s nuclear site health and safety purposes—in other words, the purposes that will govern the ONR’s general responsibilities for conventional, or non-nuclear, hazards on nuclear sites in Great Britain. The clause is therefore fundamental to the ONR provisions. Key areas will include construction safety, and safety when working at height and in confined spaces. However, those are just examples and the ONR will be responsible for regulating all health and safety regulation on nuclear sites.
The clause is a direct consequence of the ONR’s establishment as an independent regulator for the nuclear industry. It means that the ONR, and not the Health and Safety Executive, will regulate conventional health and safety on licensed nuclear sites in its own name. Naturally, the Health and Safety Executive and the interim ONR will work closely together; specifically, in response to the hon. Gentleman’s request for more detail, they will work together to ensure that there is a smooth transition and that the statutory ONR is fully equipped to take on its new responsibilities. Clause 75 requires a co-operation agreement. To answer the hon. Gentleman’s question, there will be no change in the day-to-day regulations; the ONR will continue to work closely with the Health and Safety Executive in the way that he requested.

Question put and agreed to.

Clause 49 accordingly ordered to stand part of the Bill.

Clauses 50 to 54 ordered to stand part of the Bill.

Schedule 6 agreed to.

Clauses55 to 57 ordered to stand part of the Bill.

Schedule 7 agreed to.

Clauses 58 to 62 ordered to stand part of the Bill.

Schedule 8 agreed to.

Clause 63 ordered to stand part of the Bill.

Clause 64  - Inquiries

Question proposed, That the clause stand part of the Bill.

Tom Greatrex: Again, I have a specific question for the Minister. The clause gives the ONR the power to
“direct an inquiry to be held into any matter if it considers the inquiry necessary or desirable for any of the ONR’s purposes.”
However, the clause contains the caveat that the ONR may only set up an inquiry
“with the consent of the Secretary of State.”
Will the Minister confirm whether that is the consent of the Secretary of State for the Department for Work and Pensions or the Secretary of State for his Department?
Subsection (3) states:
“An ONR inquiry must be held in accordance with regulations made by the Secretary of State”,
and subsection (5) sets out in detail what provisions those regulations may contain. The purpose of the provisions for the ONR is to give that body, which is independent, a statutory footing. Yet it is not clear to me why an independent body must first receive the consent of the Secretary of State to conduct an inquiry and why it must follow the process set out by the Secretary of State in regulations.
What is the logic behind that? Is there a particular reason for requiring the approval of the Secretary of State? Does the Minister accept that that could be seen as detracting from the independence of the ONR? Given all the issues to do with nuclear regulation that we have touched on, it is important that the ONR should be absolutely independent, and should be widely perceived to be so.
Perhaps the Minister will address those points: which Secretary of State; the potential issues to do with independence; and the direction of the inquiries.

John Hayes: When either the Government or the public raise serious concerns on a subject that is within the remit of the new body, an inquiry can be set up, as the clause makes clear, to look into the matter. I know that members of the Committee will be familiar with the kind of inquiries in question, but, to clarify, they would be along the same lines as the Ladbroke Grove rail inquiry and the Piper Alpha inquiry.
It is important that the regulator’s expertise should be available to assist in determining where things have gone wrong and to make recommendations about what steps can be taken as a result of the inquiry to avoid similar occurrences. Of course no one wants such a thing to happen or anticipates a serious nuclear incident in Great Britain, but the purpose of the legislation is to be sure that the ONR is able to set up an inquiry to establish causes and learn lessons from any incident that requires such an approach.
The hon. Gentleman asked why any inquiry would have to be held in accordance with regulations made by the Secretary of State—it would be the Secretary of State for Energy and Climate Change, by the way. It is a perfectly reasonable question. In essence, the reason is that it would make it possible to ensure that any inquiry was robust, for example by allocating the power to call witnesses and creating offences of failure to comply with the person directing the inquiry. Also, it would make it possible to report back to Parliament through the normal process of scrutiny that the Secretary of State enjoys in this House. It is important that the Secretary of State be at the apex of the process, for all those reasons.
The requirement also matches the Government’s commitment to creating an open and transparent regulator. The conduct of, and reports from, an inquiry must be put into the public domain unless provision is made in regulations requiring that they be kept private, for example in the instance of sensitive nuclear information being considered. The arrangements would guarantee proper scrutiny but provide appropriate levels of authority, to ensure that any relevant inquiry was fit for purpose.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clauses 65 to 72 ordered to stand part of the Bill.

Clause 73  - Consent of Secretary of State for certain communications

John Hayes: I beg to move amendment 95, in clause73,page63,line19,at end insert—
‘() advice given in a particular case.’.
The ability of the ONR to give unfettered independent advice to individuals and individual licence holders on specific regulatory issues is critical. The amendment makes that explicit.
Clause 73 requires the ONR to seek the Secretary of State’s consent before publishing certain communications relating to nuclear security, and the amendment means that the ONR will not be required to do before issuing advice or guidance to individual duty holders on specific matters. The amendment is minor but important, in that it reflects the general policy intent. It provides the further clarity that the Government, the ONR and the regulated community require on the application of the power provided for in the clause.

Amendment 95 agreed to.

Clause 73, as amended, ordered to stand part of the Bill.

Clauses 74 to 79 ordered to stand part of the Bill.

Schedule 9  - Disclosure of information

John Hayes: I beg to move amendment 100, in schedule 9, page143,line33, at end insert—
(1) Paragraph 2 does not prohibit a disclosure of protected information which is made—
(a) by the ONR, an inspector, a health and safety inspector or an ONR inquiry official, and
(b) for any of the purposes specified in section 17(2)(a) to (d) of the Anti-terrorism, Crime and Security Act 2001 (criminal proceedings and investigations).
(2) Section 18 of that Act (restriction on disclosure of information for overseas purposes) has effect in relation to a disclosure authorised by sub-paragraph (1) as it has effect in relation to a disclosure authorised by any of the provisions to which section 17 of that Act applies.’.

Edward Leigh: With this it will be convenient to discuss Government amendments 96, 97, 101 to 114 and 99.

John Hayes: I do not want to take up too much of the Committee’s time, but we are making rapid progress, for which you, Mr Leigh—

Edward Leigh: I bear all the credit.

John Hayes: You have changed the tone and speed of our consideration almost magically, Mr Leigh. The Committee will want to know that the amendments are to clarify the ONR provisions and ensure that they interact appropriately with existing legislation. You will be familiar with the Explosives Act 1875, and I thought it was worth mentioning that Act and the impact of these changes on it. I can see that Opposition Members are not on the ball—they have not picked that one up.

Edward Leigh: It was probably a good joke, so perhaps the Minister will repeat it.

John Hayes: But you said earlier that tedious repetition was not allowed, Mr Leigh.

Edward Leigh: Not in your case.

John Hayes: I will do the joke with more drama, as I understated it a bit and threw it away too much—the whole Committee will be familiar with the Explosives Act 1875 and will understand the relationship between these changes and that Act. I have no doubt that the hon. Member for Brent North will have something to say about it in a moment.
The provisions interface and, indeed, interact with that Act, as well as the Factories Act 1961, the Railways Act 2005 and the Energy Act 2004. The vast majority of the amendments are consequential ones to ensure that the independent statutory ONR continues to have the same role as part of the Health and Safety Executive. Amendments 99 and 102 will ensure that certain consequential amendments to the Nuclear Installations Act 1965 do not affect the legal position in Northern Ireland. I will increase my pace, because I can see the hon. Gentleman looking up that Act. Amendment 96 will allow the amendments to the 1965 Act that are to be made under clause 91 to apply to the whole of the UK, which will ensure that parallel versions of the Act are not created for different parts of our United Kingdom.
Amendment 97 will clarify the transitional arrangements that can be made by order to aid the creation of the ONR. Amendment 101 will provide for the assignment of enforcement responsibility between the ONR and the Office of Rail Regulation to ensure that their regulatory roles under the Health and Safety at Work etc. Act 1974 are clear. Amendment 107 will place the ONR in the correct category of responder in civil contingency legislation, which will ensure that, as a specialist agency, it continues to support front-line emergency services.
Amendments 103, 104, 106, 108, 111, 113 and 114 will ensure that the status quo is preserved with respect to the ONR inspectors’ regulatory powers and the ONR’s position as an expert consultee. Amendments 100, 105 and 112, hon. Members will be pleased to know, are technical amendments—as though the others were not—intended to preserve the existing regulatory framework. Finally, amendments 109 and 110 are technical drafting amendments that ensure that health and safety legislation is cross-referenced correctly in a number of pieces of existing legislation.
The majority of these amendments are simply the dotting of i’s and crossing of t’s that could not be completed ahead of introduction. Taken as a whole they provide clarity to the Bill and are important in making good legislation. They do not change the overall intent or effect of part 2 of the Energy Bill, but it is important that they are made—and not even I could weave W. B. Yeats into that. I beg to move these amendments.

Barry Gardiner: The Minister was absolutely right. I did immediately take up the challenge, and I have gone to legislation.gov.uk to look up the Explosives Act 1875. I am appalled, Mr. Leigh, because I find there that it says:
“Changes to legislation: There are outstanding changes not yet made by the legislation.gov.uk editorial team to Explosives Act 1875”.
Given that his party has been in power for 80 years of the intervening period I just wish he would hurry up and get on with it.

John Hayes: I have nothing to add.

Amendment 100 agreed to.

Schedule 9, as amended, agreed to.

Clause 80  - Crown application: Part 3

Question proposed, That the clause stand part of the Bill.

Tom Greatrex: Clause 80 stipulates that regulations may
“provide for fees to be payable for, or in connection with, the performance of any the following functions (whenever conferred)”
and then goes on to list those functions. A briefing provided by DECC officials in December advised that, at present, the nuclear industry covers 95% of the costs incurred by the ONR, with the other 5% provided from grants in aid through the DWP. According to that briefing, the proportions were changed to 98% from the industry and 2% from DWP, meaning the industry will cover a greater proportion of the costs.
However I have yet to understand completely, and perhaps the Minister can help, whether the Government expect the value of those costs to increase. It is welcome that the industry will bear a greater share of the burden, rather than taxpayers, but I would be grateful if the Minister could set out what estimate has been made, if any, of the monetary value of those costs. I do not accuse the Government of sleight of hand, but it is possible that while the taxpayer share of the cost falls as a proportion, in monetary terms it actually increases. I would be grateful for clarity on that specific point from the Minister.

John Hayes: Again, the shadow Minister makes a reasonable inquiry. To do its job properly the ONR needs to be properly resourced, and that is why the fee clause is part of these proposals. As part of the reform that we seek, the clause, in essence, widens the cost-recovery powers available to the current nuclear regulator. These amended cost-recovery powers will therefore be available to the ONR in future. I use the word “widens” because the existing regulator already has a range of cost-recovery powers at its disposal, for example under the Nuclear Installations Act 1965, and already recovers the majority of costs from those it regulates. It is established practice in nuclear, as in other high hazard industries, that a regulator’s costs are borne by the industry and not by the taxpayer. This clause will therefore supplement and expand on the nuclear regulator’s existing cost-recovery powers, up to the point where virtually all of the regulator’s costs will be recoverable from the industry.
I think that what lies behind the shadow Minister’s inquiry is a proper desire to ensure that this process is not a licence to print money. The ONR will not be able to increase its costs at random, but it needs to be confident in the knowledge that it can always recover such costs from the nuclear industry. The ONR is not designed to be a revenue-raising vehicle, and this measure is not a revenue-raising measure but one that is about cost recovery.
If the ONR has any proposals for new fees regulations, it must consult on such proposals under clause 60 before putting them to the Secretary of State to be made. The monetary value is around £1.5 million, in real value, to be precise. Furthermore, we would expect the ONR as a matter of good practice to consult the industry on any increases to any of its existing fees that it may propose. These costs are borne by the industry, so it is important that the industry is part of the process by which any changes are considered and made.
Finally, let me stress that there is nothing in this fees clause approaching a tax or a levy on the nuclear industry. That has been specifically ruled out. In essence, that does not change the process that has taken place, but it empowers and—as I described, but only in the terms that I described—widens the fee-recovery arrangement. So the passing of any fees to the employees or to those seeking or training for employment is also ruled out. The clause only enables fees to be charged in connection with specific regulatory functions delivered by the ONR to the industry. It is heavily constrained; there is nothing more.
Having given these reassurances, I beg to move that clause 80 stands part of the Bill.

Question put and agreed to.

Clause 80 accordingly ordered to stand part of the Bill.

Clauses 81 to 85 ordered to stand part of the Bill.

Schedule 10 agreed to.

Clauses 86 to 90 ordered to stand part of the Bill.

Clause 91  - Subordinate legislation under Part 2

Amendment made: 96, in clause91,page74,line25,at end insert—
‘( ) In relation to any modification of a provision of, or made under, any of the provisions of the Nuclear Installations Act 1965 that are relevant statutory provisions, the power conferred by subsection (6)(a) includes power to extend the modification to Northern Ireland for the purpose of ensuring that the text of the provision is uniform throughout the United Kingdom (but does not include power to alter the effect of the provision in relation to a site in Northern Ireland).’.—(Mr Hayes.)

Clause 91, as amended, ordered to stand part of the Bill.

Clause 92  - Transitional provision etc

Amendment made: 97, in clause92,page74,line31,leave out from beginning to end of line 34 and insert ‘, in particular—
(a) provision modifying any provision made by—
(i) primary legislation passed before the end of the session in which this Act was passed, or
(ii) an instrument made before the end of that session;
‘(b) provision for treating any regulations within subsection (1) as relevant statutory provisions (or as relevant statutory provisions of a particular description).
‘(2A) The regulations mentioned in subsection (2)(b) are regulations made under a provision within subsection (2B) so far as they relate to, or to fees payable in respect of functions which relate to, any of the following purposes—
(a) the nuclear safety purposes;
(b) the nuclear security purposes;
(c) the nuclear safeguards purposes;
(d) the transport purposes.
(2B) The provisions mentioned in subsection (2A) are—
(a) section 2(2) of the European Communities Act 1972 (general implementation of Treaties);
(b) section 15 of the 1974 Act (health and safety regulations);
(c) section 43 of that Act (fees);
(d) section 3 of the Nuclear Safeguards Act 2000 (identifying persons who have information);
(e) section 77 of the Anti-terrorism, Crime and Security Act 2001 (regulation of security of civil nuclear industry).’.—(Mr Hayes.)

Clause 92, as amended, ordered to stand part of the Bill.

Clause 93 ordered to stand part of the Bill.

Schedule 11 agreed to.

Clause 94 ordered to stand part of the Bill.

Schedule 12  - Minor and consequential amendments relating to Part 2

Amendments made: 101,in schedule 12, page155,line10, at end insert—
‘(d) in paragraph (b), after sub-paragraph (ii) insert—
“(iii) assigned to the Office of Rail Regulation or the Office for Nuclear Regulation for the purpose of removing any uncertainty as to what are by virtue of any of the relevant statutory provisions their respective responsibilities for the enforcement of any of those provisions;”.’.
Amendment 102,in schedule 12, page159,line8, leave out from ‘months’ to ‘or’ in line 9.
Amendment 103,in schedule 12, page166,line16, at end insert—

‘Explosives Act 1875 (c. 17)
44A The Explosives Act 1875 is amended as follows.
44B In section 61 (keeping and carriage of samples by an inspector appointed by the Health and Safety Executive under section 19 of the 1974 Act), at the end insert the following paragraph—
“The reference to an inspector appointed by the Health and Safety Executive under section 19 of the Health and Safety at Work etc. Act 1974 (“the 1974 Act”) is to be read, in relation to a relevant nuclear site, as a reference to an inspector appointed by the Office for Nuclear Regulation under that section.
For this purpose a relevant nuclear site is one in relation to which the Office for Nuclear Regulation has responsibility for the enforcement of any of the relevant statutory provisions (within the meaning of Part 1 of the 1974 Act) by virtue of section 18(1A) or (2) of the 1974 Act.”
44C In section 74 (seizure and detention of explosives liable to forfeiture), after subsection (6) insert the following paragraph—
“In this section, any reference to an inspector appointed by the Health and Safety Executive under section 19 of the Health and Safety at Work etc. Act 1974 (“the 1974 Act”) is to be read, in relation to anything found on a relevant nuclear site, as a reference to an inspector appointed by the Office for Nuclear Regulation under that section.
For this purpose a relevant nuclear site is one in relation to which the Office for Nuclear Regulation has responsibility for the enforcement of any of the relevant statutory provisions (within the meaning of Part 1 of the 1974 Act) by virtue of section 18(1A) or (2) of the 1974 Act.”

Factories Act 1961 (c. 34)
44D In section 176(1) of the Factories Act 1961 (general interpretation), in the definition of “inspector”, for the words from “means” to “and references” substitute “, in relation to a factory, means an inspector appointed under section 19 of the Health and Safety at Work etc. Act 1974 (“the 1974 Act”)—
(a) in the case of a factory on a site in relation to which the Office for Nuclear Regulation has responsibility for the enforcement of any of the relevant statutory provisions (within the meaning of Part 1 of the 1974 Act) by virtue of section 18(1A) or (2) of that Act, by the Office for Nuclear Regulation;
(b) in any other case, by the Health and Safety Executive, and references” ’.
Amendment 104,in schedule 12, page167,line18, at end insert—

‘Electricity Act 1989 (c.29)
50A The Electricity Act 1989 is amended as follows.
50B (1) Section 3C (health and safety) is amended as follows.
(2) In subsection (1), for the words following “consult” substitute “—
(a) the Health and Safety Executive about all electricity safety issues, and
(b) the Office for Nuclear Regulation about all electricity safety issues relating to nuclear sites (within the meaning of Part 2 of the Energy Act 2013),
which may be relevant to the carrying out of their respective functions under this Part.”
(3) In subsection (3), after “Health and Safety Executive” insert “or the Office for Nuclear Regulation”.
50C In section 56C (references to the Competition Commission), in subsection (6)(c), after “Health and Safety Executive” insert “, the Office for Nuclear Regulation”. ’.
Amendment 105,in schedule 12, page168,line18, at end insert—

‘Deregulation and Contracting Out Act 1994 (c. 40)
58A (1) Section 37 of the Deregulation and Contracting Out Act 1994 (power to repeal certain health and safety provisions) is amended as follows.
(2) In subsection (1), after paragraph (b) insert—
“(ba) any of the relevant nuclear provisions,
(bb) any provision of regulations under section54 of the Energy Act 2013 which has effect in place of any of the relevant nuclear provisions,”.
(3) In subsection (2), after paragraph (ac) insert—
“(ad) in the case of regulations under paragraph (ba) or (bb) of that subsection, the Office for Nuclear Regulation,”.
(4) In subsection (7) for “or (b)” substitute “(b), (ba) or (bb)”.
(5) In subsection (9)(a), for “or (b)” substitute “(b), (ba) or (bb)”.
(6) After subsection (9) insert—
“(10) In subsection (1), “the relevant nuclear provisions” means—
(a) sections 1, 3 to 6, 22 and 24A of the Nuclear Installations Act 1965, and
(b) any regulations made under any of those sections,
so far as they have effect in England and Wales or Scotland.” ’.
Amendment 106,in schedule 12, page169,line6, at end insert—

‘Energy Act 2004 (c. 20)
63A The Energy Act 2004 is amended as follows.
63B In section 14 (annual reports), in subsection (3)(g), after “with” insert “the Office for Nuclear Regulation,”.
63C (1) Schedule 2 (procedural requirements applicable to NDA’s strategy) is amended as follows.
(2) In paragraph 4(2) (consultation by NDA), before paragraph (a) insert—
(za) the Office for Nuclear Regulation;”.
(3) In paragraph 5(9) (approval of strategy), after paragraph (a) insert—
(aa) the Office for Nuclear Regulation;”.
63D (1) Schedule 3 (procedural requirements applicable to NDA’s annual plans) is amended as follows.
(2) In paragraph 2(1) (consultation by NDA), before paragraph (a) insert—
(za) the Office for Nuclear Regulation;”.
(3) In paragraph 3(8) (approval of annual plan), after paragraph (a) insert—
(aa) the Office for Nuclear Regulation;”.’.
Amendment 107,in schedule 12, page169,line8, leave out from ‘Part’ to ‘The’ in line 10 and insert ‘3 of Schedule 1 to the Civil Contingencies Act 2004 (category 2 responders: general), after paragraph 29A insert—
“Miscellaneous
29B ’.
Amendment 108,in schedule 12, page169,line10, at end insert—

‘Railways Act 2005 (c. 14)
64A Schedule 3 to the Railways Act 2005 (transfer of safety functions) is amended as follows.
64B In paragraph 1(5) (railway safety purposes), after paragraph (b) (but before the “and” immediately following it) insert—
(ba) the Office for Nuclear Regulation;”.
64C (1) Paragraph 2 (ORR’s principal railway safety functions) is amended as follows.
(2) In sub-paragraph (6), for the words following “must” substitute “—
(a) if the proposals relate to regulations that are relevant to the ONR’s purposes (within the meaning of Part 2 of the Energy Act 2013), consult the Office for Nuclear Regulation;
(b) in any case, consult—
(i) such government departments, and
(ii) such other persons,
as it considers appropriate.”
(3) In sub-paragraph (7), at the end insert “and, if the regulations are relevant to the ONR’s purposes (within the meaning of Part 2 of the Energy Act 2013), the Office for Nuclear Regulation”.
64D In paragraph 4 (reports and investigations), after sub-paragraph (4) insert—
“(4A) The Office of Rail Regulation must consult the Office for Nuclear Regulation before taking any step under sub-paragraph (1) in relation to a matter which appears to the Office of Rail Regulation to be, or likely to be, relevant to the ONR’s purposes (within the meaning of Part 2 of the Energy Act 2013).” ’.
Amendment 109,in schedule 12, page170,line16, after ‘meaning’ insert ‘of Part 1’.
Amendment 110,in schedule 12, page171,line13, after ‘meaning’ insert ‘of Part 1’.
Amendment 111,in schedule 12, page171,line21, at end insert—

‘National Health Service Act 2006 (c. 41)
69A In section 2A of the National Health Service Act 2006 (Secretary of State’s duty as to protection of public health)—
(a) in subsection (3)(b), for “the Health and Safety Executive” substitute “a relevant body”;
(b) in subsection (4)(a), for “Health and Safety Executive” substitute “relevant body”;
(c) after subsection (4) insert—
“(5) For the purposes of subsections (3) and (4), each of the following is a relevant body—
(a) the Health and Safety Executive;
(b) the Office for Nuclear Regulation.”.’.
Amendment 112,in schedule 12, page171,line24, at end insert—

‘Corporate Manslaughter and Corporate Homicide Act 2007 (c. 19)
70A In section 25 of the Corporate Manslaughter and Corporate Homicide Act 2007, in the definition of “health and safety legislation”, at the end insert “and provision dealing with health and safety matters contained in Part 2 of the Energy Act 2013 (nuclear regulation)”.’.
Amendment 113,in schedule 12, page171,line29, at end insert—

‘Energy Act 2008 (c. 32)
71A The Energy Act 2008 is amended as follows.
71B In section 46 (approval of a funded decommissioning programme), in subsection (6), for paragraph (a) substitute—
“(a) the Office for Nuclear Regulation,”.
71C In section 50 (power to disapply section 49), in subsection (2), for paragraph (a) substitute—
“(a) the Office for Nuclear Regulation,”.
71D In section 54 (nuclear decommissioning: regulations and guidance), in subsection (8), for paragraph (a) substitute—
“(a) the Office for Nuclear Regulation,”.
71E In section 59 (offence of further disclosure of information), in subsection (2)(c)—
(a) for “the Health and Safety Executive” substitute “the Office for Nuclear Regulation”;
(b) for “the Executive” substitute “the Office for Nuclear Regulation”.
71F In section 63 (co-operation with other public bodies), in subsection (2), for paragraph (a) substitute—
“(a) the Office for Nuclear Regulation;”.’.
Amendment 114,in schedule 12, page172,line4, at end insert—

‘Health and Social Care Act 2012 (c. 7)
74 In section 58(6) of the Health and Social Care Act 2012 (radiation protection functions), after paragraph (b) insert—
“(c) the Office for Nuclear Regulation”.’.—(Mr Hayes.)

Schedule 12, as amended, agreed to.

Clauses 95 to 102 ordered to stand part of the Bill.

Clause 103  - Right to transfer the government pipe-line and storage system

Question proposed, That the clause stand part of the Bill.

Luciana Berger: Clause 103 gives the Government the power to sell or lease the Government pipeline and storage system—the GPSS—at a future date should they want to do so. The GPSS, run by the oil and pipelines agency—the OPA—for the Ministry of Defence, consists of some 2,500 km of pipeline and plays a vital strategic role in providing a secure supply of aviation fuel for military needs across the country.
The Minister with responsibility for defence equipment, support and technology set out the Government’s rationale for contemplating a sale during the evidence session. He said that the MOD currently receives only 10% of the thoroughfare of the pipeline and that 40% of commercial aviation fuel is currently supplied through it. He went on to say that, given the increasing use of the pipeline for commercial purposes and the future cost of upgrading, maintaining and securing the GPSS, it was right that the Government consider the case for selling the pipeline and paying for its use for military needs.
On that basis, I want to make a brief contribution with the intention of probing and seeking assurances from the Minister about the conditions of any potential sale of the GPSS. Most of the questions relate to a sale of the GPSS under clause 103, but a few may relate to surrounding clauses. I thought it better to raise them all under this clause rather than to detain the Committee for any longer than is needed. I hope you will grant me some slight discretion in doing so, Chairman.

Edward Leigh: Naturally, in your case. I will not be so generous to the Minister.

Luciana Berger: We would like assurances on what would happen in three key areas in the event of a sale. The first is the security of the pipeline and surrounding installation. The second is the cost of maintaining a publicly owned pipeline, set against the cost of the Government paying for its use and access following a sale. Finally, there are some safety issues.
On security, the GPSS is an important strategic asset for the country as well as for the Ministry of Defence. It is important that in the event of a sale, the security of the pipeline from attack—a physical or a cyber-attack—be maintained. How will the Government ensure that a potential purchaser commits to guaranteeing a high level of security, particularly cyber-security, across the pipeline and its supply chain? If the Government are not willing to seek guarantees as a condition of a sale, that would raise significant concerns about the viability of any sale.
On costs, during our evidence session, the Minster with responsibility for defence equipment, support and technology refused my request that this Committee be provided with information on potential costs to the Government as a result of a sale, the current value of GPSS and its operating costs. His argument was that such information is not needed to make a judgment on whether or not the Government should have the power to sell the pipeline in the future. That makes it impossible for this Committee to decide whether selling the GPSS is the right course of action. Given that, will the Minister commit today that any future sale will receive parliamentary scrutiny before it is approved and that these commercially sensitive documents will be examined by a Committee of the House on a confidential basis, so that the public can be assured that they will receive value for money?
Will the Minster also give an indication of how access charges are likely to be calculated in practice? Will they be agreed at the point of sale? Will they be fixed for a set period, or will they be negotiated on an annual basis, in which case how will the Government protect themselves from being held to ransom by a commercial owner?
On future supply, what conditions will be put in place following a sale to guarantee the supply of aviation fuel to MOD airbases, which my colleagues from the shadow Defence team tell me require a minimum of three days of supply? Will the Minister also explain the process by which the Government could commandeer use of the pipeline in the event of the UK being placed on a war footing?
Finally on safety, the Minster will remember the Buncefield fire in 2005, which was caused by an explosion at the Hertfordshire oil storage terminal. Will the Minster outline how any sale of the GPSS would not lead to an increased risk of a similar such fire occurring in the future? Crucially, in the unfortunate event of an accident, will the Minister confirm that the Government will retain liability?
I have a few further questions for the Minister, but I cannot take credit for them. Although the issue of a future sale of GPSS has not yet become front-page news, it has, however, received significant attention in Private Eye. In its most recent issue, on page 29, it poses a number of important questions that the Government have yet to address. I am sure the Minster is an avid reader of Private Eye and will no doubt already have prepared his detailed answers. None the less, the questions are worthy of consideration now, and it is important that we get the answers on the record. I am grateful to Private Eye for outlining these issues.
The GPSS is operated from the Defence Petroleum Centre, which also houses a military oil storage depot and a petroleum training school. Will the Minister tell us what would happen to them under a commercially owned GPSS? What would happen if a new owner used the GPSS to transport biofuels, which, as Private Eye points out, can attack the rubber seals on aircraft fuel systems?
Finally, what action would the Government take in the event of a co-ordinated strike action by both tanker drivers and any new private sector pipeline work force? I appreciate that I have posed a number of questions for the Minister, and I can see that the officials are very busy. Perhaps the fact that I have had to ask so many questions is an indication of the lack of detail the Government have provided thus far. All the questions require answers, and I would be grateful if the Minister addressed them in some detail so that we do not need to revisit them on Report.

Alan Whitehead: I will detain the Committee only briefly by adding one question to the comprehensive list asked by my hon. Friend the Member for Liverpool, Wavertree. What would happen if a sale attracted the attention of a prospective purchaser who happened to be the system operator? Does the Minister believe that any issues might arise from such a sale, and does the Bill need to contain some way of dealing with such issues?

Gregory Barker: The hon. Member for Liverpool, Wavertree raised a number of points. She is right to scrutinise this less glamorous but important part of the Bill, which makes provision for the potential sale of the GPSS. Clause 103 is crucial because it allows for the sale or lease of the GPSS or a part of it. The sale contract would be a private matter and not wholly for Parliament. Government will have to be reassured that the contract meets their requirements before signing it. I am sure that the Public Accounts Committee would also want to scrutinise any sale in the usual way. I must emphasise that nothing in the Bill deals with the contractual nature of such a sale. The provisions in clause 103 and related clauses simply deal with the theoretical possibility of giving the Secretary of State the power to conduct a sale, rather than the details of any sale to a particular party.
At present, although the Secretary of State for Defence could theoretically sell the fabric of the system, he cannot transfer the associated rights to operate and maintain the system and to access land for that purpose. Clause 103 allows the Secretary of State for Defence to transfer those rights along with selling or leasing the GPSS. It also gives the Secretary of State flexibility as to whether the GPSS should be sold or leased, and to impose such conditions as he considers appropriate. Many of those would cover exactly the sort of issues the hon. Lady raised. A decision on sale or lease will be made only once further analysis has been undertaken and we have engaged with the market.
The clause also allows for the transfer of liabilities. We are confident that we will be able to put a contract in place to meet the continuing requirements of the Ministry of Defence and United States visiting forces, and which will offer the appropriate level of protection needed to meet the armed forces’ requirements. The Department of Energy and Climate Change is looking at whether additional measures may be required post-sale regarding access and charging for all pipelines, over and above existing legislation.
The hon. Lady asked some more detailed questions, and I will endeavour to answer them. If she feels that I have not been able to answer them in sufficient detail, I will be happy to write to her. She asked whether the system would be more vulnerable to possible terrorist attack once it had been sold. The sale of the GPSS may well lead to greater information regarding the pipeline being in the public domain, but we do not believe that that will make it any more vulnerable than any other equivalent infrastructure operated by the private sector, such as the electricity and gas distribution networks, particularly because the pipeline and storage tanks are predominantly built underground to make the system less vulnerable to attack. The Ministry of Defence regularly assesses risks to its supply chain in the UK, and it is satisfied that the sale of the GPSS does not pose an unacceptable risk to defence outputs.
The hon. Lady asked whether the sale of the GPSS would end up costing the taxpayer more in the long run, which is a sensible question to ask. A final decision on the sale would, of course, take that into account. Such a decision would be dependent on being able to strike the right deal with the private sector, and value for money is a key consideration. Work is under way to update the initial value-for-money analysis undertaken last year. Defence Ministers will be asked to decide whether to invite bids for the GPSS on the basis of that work.
The hon. Lady also asked whether the impact assessment shows that the sale will not provide value for money. Although the initial analysis shows that retention within the Government, rather than sale, currently provides best value for money, changes to the service charge, increased capital expenditure to comply with evolving environmental legislation, and changes to the commercial revenue stream or the asset receipts could result in sale providing best value for money in future. We are working with the Oil and Pipelines Agency to identify the restructuring opportunities that would enable the changes. I point out that it is the Oil and Pipelines Agency that is assisting with this, not the Defence Petroleum Centre as quoted by the hon. Member for Liverpool, Wavertree from Private Eye.
The hon. Lady also asked how we can be sure that the sale will not adversely impact on safety or the environment, which are other important considerations. There is no reason to believe that the sale of the GPSS will adversely impact on safety or the environment. The OPA already has to comply with a number of safety regimes, such as the Health and Safety at Work, etc. Act 1974, the Control of Major Accident Hazards Regulations 1999, regulations under the Environmental Protection Act 1990 and the Pipeline Safety Regulations 1996. That will not change.
The hon. Lady also asked whether armed forces requirements would be met post-sale and whether we would be able to guarantee them. That is obviously a high priority for the Government. There is a range of potential mechanisms for ensuring that the armed forces’ requirements can be met in future. They include contractual arrangements with any potential new owner in respect of both the sale and the ongoing provision of services, which again will be able to offer the same level of protection to meet armed forces requirements as any of the other contracts. Other possibilities may include a long-term lease or concession of the GPSS, rather than sale.
The hon. Lady asked about cyber-attack. Officials at the Oil and Pipeline Agency regularly discuss with appropriate external organisations measures best to protect the GPSS, including from the risk of cyber-attack. We would expect that to continue. She also asked about the threat of a fuel tanker drivers’ strike and other co-ordinated industrial action, and whether selling this asset could exacerbate that risk. The GPSS plays a crucial role in providing fuel to some of the UK’s key airports, and we are clear that that supply must not be compromised in the event of its sale. Any other capabilities, military or civilian, offered by the GPSS that the Government believe they should be able to continue to draw on will be safeguarded in contractual arrangements connected with any sale, should such a sale take place.
On biofuels, I can assure the hon. Lady that they will be used only if they do not compromise pipeline integrity; currently, they are not used at all.
We do not believe that the sale of the GPSS, as I have said, makes the system more vulnerable to terrorist attack than equivalent infrastructure operated by the private sector. We believe that it is a sensible move to give the powers to the Secretary of State. Further scrutiny closer to the point of sale may be necessary. However, it is a sensible provision to include in the Bill.

Question put and agreed to.

Clause 103 accordingly ordered to stand part of the Bill.

Clauses 104 to 107 ordered to stand part of the Bill.

Schedule 13 agreed to.

Clause 108 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Joseph Johnson.)

Adjourned till Tuesday 5 February at five minutes to Nine o’clock.